Five ways to cut your monthly mortgage payments

Are you struggling to make your mortgage payments? One of these five refinancing solutions could be the answer.

Are you straining under the financial pressure of making your mortgage payments?

You're not alone. The rate for delinquency on single-family home loans was at 10.77 percent at the end of the third quarter in 2012, according to data from the Federal Reserve System.

Ready for some good news? You don't have to be stressed about your mortgage for much longer. There are things you can do to ease the pain of your mortgage payments.

Keep reading for five refinancing solutions that could help you forget about your mortgage troubles.

Refinancing Solution #1: Get a lower interest rate

Your mortgage payments are directly dependent on your mortgage rate, according to a mortgage refinancing guide published by the Federal Reserve. It also notes that reducing your rates may lower your payments and alleviate financial pressure.

The experts agree.

"Depending on loan size, a rate reduction of as little as a half point can save some real money," says Amy Tierce, chair of the education committee of the Massachusetts Mortgage Bankers Association.

Andrew Schrage, a personal finance expert and co-owner of the personal finance website, moneycrashers.com, believes that now is the time to refinance to a lower rate and reduce your monthly costs.

Why? Because "The housing market has finally bottomed out, and interest rates are at an all-time low, so refinancing your mortgage now is definitely in your best interest," says Schrage.

Refinancing Solution #2: Switch to a 30-year mortgage term

Your mortgage term is the length of time it will take you to pay off your mortgage. And if your family is facing financial burden, lengthening your mortgage term can help reduce your monthly mortgage payments.

But before you switch to a longer-term mortgage, consider that the length of time you will continue to make mortgage payments will increase - along with the amount of interest that you pay - costing you more money in the long-term, notes the Federal Reserve.

Despite this, if you're struggling to make your payments, Tierce sees this as a beneficial option to help cut immediate costs.

"We have seen borrowers who were in 15-year fixed rate mortgages go to a 30-year fixed rate in order to reduce their monthly mortgage expenses," she says. "These borrowers are still ahead in that they have paid down principal with the shorter term mortgage, but today need the flexibility of a lower mortgage payment."

Refinancing Solution #3: Switch to a fixed-rate mortgage

If you currently have an adjustable-rate mortgage, refinancing to a fixed-rate mortgage is another option that could help cut your monthly payments.

Why? Well, according to government lender, Freddie Mac, fixed interest rates were at historical lows in the week ending in November 21.

Thus, "If you are currently in an adjustable rate and believe that you will be staying in the property for the foreseeable future, it may make sense to refinance into today's low fixed rates," suggests Tierce.

"Many homeowners that currently have an adjustable-rate mortgage (ARM) can switch to a 30-year fixed mortgage, often at a lower interest rate and payment than what they currently are in," Moustakas says.

If you'd rather stick with your ARM instead of switching to a fixed-rate mortgage, the Federal Reserve suggests refinancing into another ARM with better terms as a way to help lower your monthly payments. These terms could include lower interest rates, smaller rate adjustments, or even a lower payment cap which prevents the rate from increasing higher than a specified amount.

But because the rate can increase with adjustable-rate mortgages, some mortgage professionals shy away from this suggestion. Schrage and Moustakas, however, believe it can be a valid choice for some homeowners who need to save money now.

"Switching to an adjustable-rate mortgage is a viable option, despite what many experts say," argues Schrage. "If you don't plan on being in your home for a significant period of time, this is definitely a great way to save money."

Why? Because according to the Federal Reserve, "Lenders generally charge lower initial interest rates for ARMs than for fixed-rate mortgages. At first, this makes the ARM easier on your pocketbook than would be a fixed-rate mortgage for the same loan amount."

Refinancing Solution #5: A HARP refinance

Have you tried to cut mortgage costs by refinancing the traditional way, but have been turned down due to the declining value of your home? The Home Affordable Refinance Program (HARP) through the U.S government may be the answer to your financial woes.

According to the HARP fact sheet, if you don't qualify for a conventional refinance, a program through HARP may help lower your mortgage payments through refinancing to a lower rate or a more stable mortgage product.

"Today's economic crisis has presented many homeowners with a unique set of circumstances, as many owe more on their homes than what they are worth," says Schrage. "But through the use of HARP, many underwater mortgage holders have found help."

So how do you know if you qualify for HARP? According the HARP website, there are a few different factors for eligibility. Among other qualifications, these include that your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, the current loan-to-value (LTV) ratio must be greater than 80 percent, and the borrower must currently be on the mortgage at the time of the refinance.